The ASX share market is known for being more volatile than other asset classes like term deposits and bonds. But ASX dividend shares may be able to provide a steady stream of passive investment income over time.
Some businesses have quite volatile dividend movements like Fortescue Metals Group Limited (ASX: FMG) and Woodside Petroleum Limited (ASX: WPL).
But, there are others which are building a reputation for consistent dividends and long-term growth. These two ASX dividend shares may be options for steady passive income:
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Pacific Current Group Ltd (ASX: PAC)
Pacific Current describes itself as an asset management outfit that aims to apply its strategic resources, including capital, institutional distribution capabilities and operational expertise to help its partners grow. At the end of January 2022, it had investments in 16 boutique asset managers globally.
One of the most important investments in the portfolio is its holding of shares of the now-listed GQG Partners Inc (ASX: GQG).
The business regularly tells investors about the total funds under management (FUM) managed by the asset managers within the portfolio. In the three months to 31 December 2021, the total FUM rose from A$150.1 billion to $165.4 billion. Excluding the new investment in Banner Oak, FUM grew by 5%. GQG growth continued, while Victory Park and EAM posted "particularly strong" inflows.
The ASX dividend share said it was expecting A$3 billion to A$8 billion of gross new commitments/inflows over the next 18 to 24 months for non-GQG boutiques when it released its FY21 result. In the first half of FY22, these boutiques had already received A$2.2 billion of gross new commitments. This caused Pacific to increase its estimate of new commitments to a range of $5 billion to $8 billion.
Pacific is expecting 2022 to be another strong year for many of its investments.
It's currently rated as a buy by the broker Ord Minnett. With FY23 projections in mind, the Pacific Current share price is valued at 11x FY23's estimated earnings with a potential grossed-up dividend yield of 8.7%.
Charter Hall Long WALE REIT (ASX: CLW)
This real estate investment trust (REIT) has one of the longest weighted average lease expiries (WALE) on the ASX. This means that its tenants are signed up for the long-term.
At 31 December 2021, it had a WALE of 12.2 years. The REIT noted that this provides long-term income security.
Charter Hall Long WALE REIT was one of the few S&P/ASX 200 Index (ASX: XJO) shares that increased its payment to shareholders during the difficult economic COVID times of 2020.
But the growth has continued. The Charter Hall Long WALE REIT's operating earnings per security (EPS) increased 5.6% in the first six months of FY22, funding a 5.1% increase of the distribution to 15.24 cents per security.
The property portfolio is now worth $7 billion, with 46% of leases being inflation-linked and achieving a 3.3% weighted average increase of 3.3% in the first half of FY22. The other 54% of leases have fixed increases – the average fixed increase was 3.1%.
Management say that the ASX dividend share continues to grow, diversify and improve the quality of the portfolio with a view to providing reliable and growing returns to investors. Minimal rental relief has been required since the onset of COVID-19. The net tangible assets (NTA) per unit is now $5.89, which is materially above the current Charter Hall Long WALE REIT share price.
FY22 operating EPS is expected to be no less than 30.5 cents, reflecting growth of no less than 4.5% over FY21.
It's currently rated as a buy by Citi, with a price target of $5.71. The broker is expecting the REIT to pay a distribution yield of 6.2% in FY22.
